Savings plans are not so super

MORE than half of Australians aged under 35 expect to retire before they reach 65, but most don't know if they will have enough money to pay for it.

The Commonwealth Bank's Great Expectations Report, to be released today, suggests many younger people are looking towards retirement through rose-coloured glasses and risk being disappointed with their nest egg later in life.

Financial experts say careful and early planning is the key to a comfortable retirement and leaving it until your 40s or 50s means you'll come up short.

The CBA research found 81 per cent of people aged 25-34, and 83 per cent of those aged 18 to 24, believe their lifestyle in retirement will be the same as now or better. However, only 14 per cent pay extra into their super above the 9.25 per cent compulsory contributions from their employer.

CBA executive general manager Linda Elkins says she thinks many under-35s simply have not done the maths on what is going to be possible.

"Retirement seems so far off for many under-35s, so their expectations are simply wishful thinking," she says.

David Scarr, a specialist retirement adviser at Centra Wealth, says many people who receive compulsory super payments may believe that saving for retirement is their employer's responsibility.

"They many not realise that they can contribute extra amounts, and there may be tax advantages to doing so," he says.

"A key thing for young people to remember is that they are responsible for saving for and determining the lifestyle they will have in retirement, not anyone else. And a shortfall in retirement savings cannot be fixed quickly."

Under current laws, the age pension will not be available for under-35s until age 67, and Scarr expects it to climb higher. He says the 9.25 per cent employer payments will not be enough for retirement.

The CBA research also found that:

* The average under-35 has less than $25,000 in superannuation.

* More than one-third (36 per cent) admit they spend money as soon as they have it;

* Just 17 per cent believe the age pension will be their main source of income in retirement; 45 per cent say it will be super.

* Almost 20 per cent expect their early retirement will be funded by an inheritance.

Elkins says practical ways for younger people to boost their retirement savings include consolidating super funds, choosing investment options that are linked to their life stage, and simply checking and understanding their super balance - something many under-35s don't do.

"If you don't know how much you've got, how can you possibly know how much you need to retire on?"